Payment banks for MSMEs have to wait, RBI examining it

Mumbai, Feb 14 (KNN)The Reserve Bank will examine the viability of setting up of 'Payments Banks' or specialised banks to provide services to small and medium enterprises (SMEs) and there is no decision yet on the issue, RBI Governor Raghuram Rajan has said."At this point there is no decision to move forward. We will look at it in great detail, including what value it brings, the viability as well as whether it presents arbitrage opportunities vis-a-vis the Schedule commercial banks," he had told reporters on the side-lines of Nasscom India Leadership Summit here earlier this week.Rajan said only after looking into all issues, will the RBI firm up views on whether to "move forward and if so, under what structures".RBI panel, headed by Nachiket Mor recently recommended that a special category of banks, called payments banks, be set up to widen the spread of payment services and deposit products to small businesses and low-income households.These banks, it said, can be set up with minimum capital requirement of Rs 50 crore, one-tenth of the Rs 500 crore required for a full-service bank.Meanwhile, delivering the D R Gadgil Memorial Lecture here yesterday, Rajan said that “We have consciously adopted the bank led model for mobile banking, while the non-banks, including Mobile Network Operators, have been permitted to issue mobile wallets, where cash withdrawal is not permitted as of now.“The key to cheap and universal payments and remittances will be if we can find a safe way to allow funds to be freely transferred between bank accounts and mobile wallets, as well as cashed out of mobile wallets, through a much larger and ubiquitous network of business correspondents,” Rajan said.The Nachiket Mor Committee suggests the creation of Payment Banks as a step towards this goal. Other suggestions include interoperable business correspondents who will get the scale economies to serve in remote locations, and the usage of NBFCs as banking correspondents. We will examine all this,” he added. Furthermore, Rajan also said that, “The Nachiket Mor Committee has also opined on how priority sector norms can be altered so that we achieve the objective of credit to priority sectors, even while doing it more efficiently.”So, for example, banks that are good at rural lending should do more of it, while banks that are good at lending to micro and small enterprises should be free to specialize there, he said.“The Committee advocates attaching weights to performance on different norms and adding performance up. So one bank may achieve its priority sector target by lending predominantly to agriculture, while another may lend only to MSMEs in meeting its target.“The weights will be adjusted so that overall targets are met by the system. So if agricultural lending is inadequate while we are getting over-performance on MSME loans, the weight on the former will be increased while the weight on the latter will be reduced. These are interesting ideas, and we will explore them in greater detail,” RBI Governor added.